As concerns over tightening by the US Federal Reserve (Fed) spread, the won-dollar exchange rate broke through 1,300 won again in three trading days.
In the Seoul foreign exchange market on the 22nd, the won-dollar exchange rate is trading at 1303.9 won, up 8 won from the previous trading day (1295.9 won) at 9:25. The exchange rate on this day started at 1306.2 won, up 10.3 won from the previous trading day. Immediately after opening, it raised its high to 1306.2 won.
The dollar is strengthening. On the 21st (local time), the Dollar Index, which represents the value of the dollar against six major currencies, closed at 104.18, up 0.31% from the previous trading day.
Investors are keeping an eye on the FOMC minutes to be released on the 22nd (local time). Although Fed Chairman Jerome Powell mentioned “disinflation” (slowing inflation), concerns arose that the Fed would tighten one after another as the consumer price index (CPI) exceeded market expectations last month.
The U.S. Department of Labor announced on the 14th (local time) that the CPI rose 6.4% in January compared to the same month last year. Although it is a slower figure than last year’s December (6.5%), it is higher than the market expectation (6.2%). On a month-on-month basis, it rose 0.5%, in line with market expectations. Core CPI, excluding highly volatile food and energy, rose 5.6% YoY. Although it was lower than last year’s December (5.7%), it was higher than the market expectation (5.5%). The month-on-month increase was 0.4%, in line with expectations.
Major indices on the New York Stock Exchange also closed lower. At the New York Stock Exchange (NYSE) on this day, the Dow Jones 30 Industrial Average finished trading at 33,129.59, down 697.10 points (2.06%) from the battlefield. The Standard & Poor’s (S&P) 500 index closed at 3997.34, down 81.75 points (2.0%), and the Nasdaq index closed at 11,492.30, down 294.97 points (2.50%).
On the same day, in the New York bond market, the 10-year US Treasury yield, the market’s benchmark rate, rose 2.78% from the battlefield to 3.958%, and the 2-year yield, which is sensitive to monetary policy, rose 1.07% from the previous trading day to 4.7119%.
Kim Seung-hyeok, a researcher at NH Futures, said, “The won-dollar exchange rate has re-entered 1,300 won amid the strong dollar trend based on solid real indicators.” The rate of increase is likely to be limited to some extent,” he said.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.